The Indian stock market witnessed a sharp decline in early trade on June 3, with the Sensex falling more than 600 points and the Nifty50 slipping below the 23,300 mark as heavy selling in information technology stocks weighed on investor sentiment. The weakness in the benchmark indices came amid rising crude oil prices, sustained foreign investor selling and growing geopolitical concerns linked to developments in West Asia.
The stock market today opened on a cautious note, but losses accelerated soon after trading began. The Nifty50 initially opened near 23,416 points before witnessing significant selling pressure that pushed the benchmark index lower. Similarly, the BSE Sensex extended its losses after a weak opening and fell more than 600 points during the morning session.
At around 9:36 a.m., the Nifty50 was trading near 23,274 points, down nearly 0.9%, while the Sensex declined more than 800 points from the previous close to trade around 73,843 points. The sharp fall highlighted growing nervousness among investors despite the strong rally witnessed in the previous trading session.
IT stocks decline after strong rally driven by AI optimism
Market participants attributed much of the decline to profit-booking in major information technology companies following their recent gains. IT sector stocks had rallied strongly in the previous session amid optimism surrounding artificial intelligence-related demand and positive cues from United States technology markets.
However, investors chose to lock in profits on Wednesday, resulting in a broad selloff across leading technology counters. Shares of major IT companies including Tata Consultancy Services, Infosys Limited, HCL Technologies Limited and Tech Mahindra Limited came under significant pressure.
Tata Consultancy Services emerged as one of the biggest losers among Nifty constituents, while Tech Mahindra, Infosys and HCL Technologies also recorded notable declines. The weakness across IT sector stocks had a disproportionate impact on benchmark indices because of their significant weightage in the market.
Foreign investor selling and crude oil prices impact market sentiment
Apart from the decline in technology shares, investors remained concerned about persistent foreign investor selling. Market data showed that foreign institutional investors sold assets worth more than ₹8,300 crore during the previous trading session, extending a broader trend of outflows seen at the start of June.
According to available market data, foreign portfolio investors have already sold more than ₹24,000 crore worth of assets during the first two trading sessions of the month. Such heavy FII outflows have raised concerns about liquidity and short-term market stability.
Another key factor affecting sentiment was the rise in crude oil prices. Oil prices continued to trade above $96 per barrel amid concerns surrounding geopolitical tensions in West Asia and uncertainty regarding regional security. Higher energy prices are generally viewed as negative for India because the country relies heavily on crude oil imports, potentially increasing inflationary pressures and widening the trade deficit.
Geopolitical concerns add to investor caution
Investor sentiment was further impacted by reports of fresh military developments involving the United States and Iran. Market participants monitored developments closely after reports suggested renewed military activity in the Gulf region despite ongoing diplomatic discussions.
Analysts noted that geopolitical uncertainty often prompts investors to reduce risk exposure, particularly in emerging markets. The combination of geopolitical tensions, elevated crude oil prices and foreign investor selling created a challenging environment for equities during the session.
ONGC and defensive stocks outperform weak broader market
Despite the broader market weakness, a handful of stocks managed to trade in positive territory. Shares of Oil and Natural Gas Corporation Limited benefited from higher crude oil prices and emerged among the top gainers. Other stocks showing resilience included Apollo Hospitals Enterprise Limited, Bajaj Auto Limited, Maruti Suzuki India Limited and Nestlé India Limited.
Market experts believe investors will continue to monitor foreign flows, crude oil prices and global developments for signs of a potential recovery. While the recent correction appears driven largely by profit-booking in IT stocks, sustained foreign investor selling and geopolitical risks could continue to influence market direction in the near term.
For now, the Indian stock market remains under pressure, with the Sensex falls 600 points narrative and the decline in IT stocks dominating market discussions as traders assess whether the latest weakness represents a temporary correction or the beginning of a broader pullback.